Fighting debt by rebranding cash

A debt analysis report released Aug. 28 by credit bureau TransUnion shows consumer debt is again on the rise. This reverses a one-time decrease last quarter.

TransUnion's forecast is for debt to soon exceed the previous record set in 2012 suggesting, in their words, the first-quarter positive trend may have been a one-time event. That's bad news.

This report refers to non-mortgage debt only, but that category is also near record highs. This latest report showed a decrease in line-of-credit balances, but an increase in credit card, instalment and auto loan debts.

At first blush, the average consumer debt of $27,131 per person might not sound that scary, but consider that likely one-third of Canadians have no debt, and then increase proportionately the net balance for those who are actually in debt.

This trend concerns me, as I believe a lot of this debt is avoidable and motivated by people's desire for the latest and greatest consumer goods they can't afford, spurred on by ever more effective advertising techniques.

This prompted me to pull out my book, Managing the Bull, and pull some thoughts from our chapter on rebranding cash as the ultimate luxury good. Can I get your help?

I'm suggesting a campaign to win over the hearts and minds of young North Americans. Our adversaries in this war include the entire retail and advertising industries, and decades of increasing momentum toward embracing materialism as our chosen way of life.

We need to help people understand that the absolutely coolest thing they can obtain -- the ultimate, selfish luxury -- is surplus cash. Forget the iPad or Galaxy 5, Lululemon wear and designer sushi, ignore the call of the BMW and trips to Cabo.

Sure, those things make you feel great for a few moments in time, like you're the coolest kid on the block or a master of the universe. But the feeling doesn't last, and very soon you need another fix.

The most powerful and lasting luxury good -- the one that permanently relieves stress, increases your confidence in every aspect of your life and makes you irresistible to the opposite sex -- is surplus cash flow.

Spending less than you make and keeping your total financial commitments below your net income will make you feel better than a weekly trip to the spa for their best cucumber eye treatment, mud wrap and pampering.

It's better -- and WAY cooler -- than a daily trip to Starbucks, leaving Victoria's Secret or the Apple Store with an armful of goods or going to an all-inclusive you can't afford.

Even a slight surplus can have these powerful effects, and create an irresistible charisma -- an aura, if you will -- around a person who formerly appeared as nervous and annoying as Bobcat Goldthwait.

That nervousness and preoccupation is what happens to people when they are wondering if they will make it to the next paycheque, juggling credit cards and overdraft payments, all the while fretting that their iPhone is already last year's model and now so uncool. (Don't get me started on the negative health effects of such a situation.)

Maybe drawing an analogy with surplus time will help. Everyone knows what it's like to be running behind schedule, rushing to important appointments, worrying about being late, not having time to find a parking place and constantly apologizing. The opposite is when you allow extra time to get somewhere, have time to drive around and find a free parking space, have time to check your texts and emails after you have actually parked the car (as opposed to doing it in traffic), and can take a few moments for yourself to properly prepare for the important meeting about to take place.

It's a wonderful luxury, and one that can completely change the way you feel about yourself. Having extra time can also provide a 100 per cent improvement in how you perform, and what you can achieve.

Having extra cash works the same way.

In the past year, at book signings, new client engagements and even social events, I have heard from many people who have successfully paid off all of their debts in a year or two, simply by committing to do it. Most had moderate or low incomes and reached this goal through commitment, rather than inheritance or windfalls.

It can be done. You likely know several young people who may be heading toward a lifetime of debt. Please share this article with them. I'll even offer a free book to anyone who presents their debt-elimination plan and displays real commitment.

Rising debt is a critical issue. Let's all do what we can to help.

David Christianson, BA, CFP, R.F.P., TEP, is a financial planner and advisor with Christianson Wealth Advisors, a vice-president with National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance.

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